Financial Crime World

The Financial Landscape of Afghanistan: A Complex Regulatory Framework

Overview

The financial landscape in Afghanistan is characterized by a complex web of regulations and enforcement agencies tasked with ensuring the stability and integrity of the country’s financial system.

Key Regulatory Agencies

  • Da Afghanistan Bank (DAB): The Afghan Central Bank plays a crucial role in setting monetary policy, regulating commercial banks, and issuing licenses. It works closely with international organizations like the International Monetary Fund (IMF) and the World Bank to promote financial stability and economic growth.
  • Financial Intelligence Unit of Afghanistan (FIU): Responsible for investigating suspicious transactions, combating money laundering, and terrorism financing. The FIU works closely with law enforcement agencies and other regulatory bodies to identify and disrupt illicit financial activities.
  • Afghan Securities Exchange (AfSE): Regulates the stock market and ensures the integrity of securities trading by issuing licenses, monitoring activities, and enforcing compliance with regulations.

Other Regulatory Bodies

  • Ministry of Finance: Responsible for fiscal policy and budgeting
  • Ministry of Commerce: Involved in promoting trade and commerce

Regulations

Here are some key regulations in place:

  • Bank Licensing and Permitting Regulation
  • Corporate Governance Regulation
  • Fit and Proper Regulation
  • Prohibited And Authorized Activities Regulation
  • Enforcement Regulation
  • Related Person Regulation
  • Asset Classification and Provisioning Regulation
  • Capital Adequacy Regulation
  • Large Exposure Regulation
  • Liquidity Regulation
  • Open FX Regulation
  • Qualified Holdings Regulation
  • Branchless Banking Regulation
  • Know your customer (KYC) Regulations
  • Repo/Reverse Repo Regulation
  • External Audit Regulation
  • AIPSSS policy for (RTGS - ACH)
  • Governing the Reporting and Control, C F of Terrorism
  • Regulation on Electronic Fund Transfers
  • Controlling Regulation
  • Licensing and Oversight of Payment
  • AML/CFT Responsibilities and preventative Measures Regulation
  • Foreign Exchange Auction Regulation
  • Regulation On domestic payment operations in AF
  • Regulation on the Secondary Market for Capital Notes
  • Capital Notes Issuance and Auction Regulation
  • Standing Facilities Regulation
  • Regulation on Registration of Securing Charges
  • Credit Reporting Regulation
  • DMFI Regulation

Purpose of Regulations

These regulations aim to:

  • Ensure stability and integrity of Afghanistan’s financial system
  • Protect consumers and investors
  • Promote economic growth
  • Prevent money laundering, terrorism financing, and other illicit financial activities

Challenges and Future Directions

Despite progress made in implementing and enforcing regulations, challenges remain due to limited resources and capacity. The Afghan government is working closely with international partners to strengthen its regulatory framework and promote financial stability.